Rs 50,000 Crore TLTRO For NBFCs, India to Bounce Back in FY 2021: Key Takeaways From RBI Address

New Delhi: Addressing the media for the second time as the central government extended the 21-day lockdown, the Reserve Bank of India (RBI) on Friday announced a slew of measures to lift the the country’s current economic situation, in the backdrop of a global recession. Also Read – Sussanne Khan’s Sister Farah Khan Ali Tests Negative After in-house Staff Tested Positive For COVID-19

Highlighting the prime focus of the monetary regulator, RBI Governor Shakuntala Das said that it will introduce new measures to maintain adequate liquidity in system, facilitate bank credit flow, as well as ease financial stress. Also Read – Coronavirus Death Mystery: Why More Men Are Dying Due to Coronavirus Than Women?

Here are the top highlights from today’s address: Also Read – ‘Will Regain Pre-Lockdown Growth Trajectory of 7.4%,’ Says RBI, Slashes Reverse Repo Rate to 3.75%

1. RBI is closely and proactively monitoring the coronavirus situation as it grips the world. The central bank is coming out with new announcements on regular intervals.

2. India’s GDP growth projection of 1.9 per cent by the International Monetary Fund (IMF) is highest among G20 countries.

3. According to IMF projections, the global economy will remain ‘volatile’ and is expected to plunge into the worst recession since ‘The Great Depression’.

4. Macroeconomic environment and financial situation has deteriorated, but India is likely to have a sharp bounce-back.

5. The impact of COVID-19 is not captured in IIP data for February.

6. Banks and financial institutions have risen to occasion to ensure normal functioning during outbreak of pandemic.

7. Automobile production and sales have declined sharply in March; electricity demand has fallen sharply. Contraction in exports in March at 34.6 per cent, much more severe than global financial crisis of 2008-09.

8. Targeted long-term repo operations worth Rs 50,000 crore to begin with, then RBI will scale uo the amount based on market response. Auction of targeted long-term repo operations worth Rs 25,000 crore to be conducted today.

9. RBI cuts reverse repo rate by 25 bps from 4 per cent to 3.75 per cent; repo rate remains unchanged.

10. NPA classification will exclude moratorium period, a 90-day NPA norm not to apply on moratorium has been granted on existing loans by banks.

11. Liquidity coverage ratio (LCR) requirement, that determines the proportion of highly liquid assets held by financial institutions, has been reduced to 80 per cent from 100 per cent; to be restored in phases by April next year.

12.Banks not to make any further dividend payout in view of financial difficulties arising from COVID-19.

13. Loans given by NBFCs to real estate companies to get similar benefit as given by scheduled commercial banks. CPI inflation declined in March.

14. Inflation is on a declining trajectory; may settle below target of 4 per cent by H1-FY21, barring any supply side disruption and shocks.

15. RBI has also decided to provide special refinance facilities for an amount of Rs 50,000 crores to National Bank for Agriculture & Rural Development (NABARD), Small Industries Development Bank of India, and National Housing Bank to enable them to meet sectoral credit needs.